SalesTaxInstructions, 2009 I am directed to refer to your letter No.24/Info/Intt/W/ 2000/1476, dated 20 th February, 2001 on the above subject and to clarify that sales tax exemption earlier available to cement of PCT Heading 25.23 was admissible to all forms and categories of cement including cement clinkers falling under the said PCT heading. [Issued by the CBR, Islamabad under the signature of Dr. Ashfaq Ahmed Tunio, Secretary (ST L&P) addressed to the Collector of SalesTax (West), Karachi. Copy endorsed to all the Collectors of Customs/SalesTax.] ******** C.No.1(557)S(STJ)/94 DATED 17 TH MAY, 2001 SUBJECT:- DIRECTIONS CONTAINED IN JUDGEMENT DATED 01.02.2001 PASSED IN WRIT PETITION 13903/94, 10267/95 BY HONOURABLE LAHORE HIGH COURT LAHORE IN CASES OF MESSERS M.T.M. INTERNATIONAL BEARING INDUSTRIES LIMITED V/S FEDERATION OF PAKISTAN ETC. I am directed to refer to your letter C.No.Coor.2(156)/94/1057, dated the 24 th March, 2001 on the subject cited above and to say that the matter has been examined in consultation with the Customs Wing of CBR and it has been observed that ball bearings/roller bearings are classifiable under PCT Heading 84.82. Ball bearings in isolation do not qualify to be a machine, machinery, plant, equipment or apparatus and cannot be termed as ―machinery‖. Section Note (5) to Section XVI of Harmonized Commodity Description and Coding System (1996 version), states that: ―For the purpose of these Notes, the expression ‗machinery‘ means any

SalesTaxInstructions, 2009 machine, machinery, plant, equipment, apparatus or appliances cited in the headings of chapter 84 or 85.‖ 2. Under SRO.600(I)/90, dated 7 th June, 1990, the definition of machinery as reproduced below does not cover ball bearings: Machinery operated by power of any description such as is used in any industrial process including the generation, transmission and distribution of power, or used in processes directly connected with the extraction of minerals and timber, constructions of buildings, roads, dams, bridges and similar structures and manufacture of goods.‖ 3. The cardinal condition for availing exemption under the said notification was that such ball/roller bearings must be identifiable for use in or with the machinery defined as above. As is apparent from the facts evident on the case papers made available to the Board, the ball/roller bearings in question were used in domestic electrical appliances such as electric motors, washing machines and donkey pumps besides tractors (automobiles) and were not meant for use in or with ‗industrial machinery‘ as defined in the aforesaid notifications, and were therefore, not exempt from sales tax. Thus, the admissibility of exemption under SRO.600(I)/90 on ball/roller bearings of PCT heading 84.82 is a question of fact, depending upon their functional and actual usage and not a question of legal interpretation. 4. The Collector is therefore, advised to finalize the case in terms of the above guidelines and report compliance to the Honourable High Court accordingly.